Company Formation in Dubai: Costs Calculated Over Three Years

The question of cost is almost always asked for the first year. That is why many company formations end up more expensive than planned: the expense shifts to later years, into renewals, visa renewals and compliance.

The three structures compared at entry level

The items that recur every year

• Licence renewal: the largest fixed item, often higher than the discounted initial price
• Office or desk: linked to the visa quota and therefore not freely scalable
• Visa renewal: every two years, per person, including the medical
• Accounting: mandatory from day one, regardless of the tax rate
• Health insurance: required for every person holding a visa

The items nobody plans for

• Tax return and, where applicable, an audit: due even at 0%
• Attestations for later changes of shareholders
• Change of activity if the business shifts
• A second structure if you later want to sell locally after all
• Travel: at least one trip, in practice usually two in the first year

As a rule of thumb: over three years, budget for two to two and a half times the formation costs. If you start at AED 25,000, you will realistically end up at AED 55,000 to 65,000 before the structure has settled.

What moves the price the most

Not the zone and not the legal form, but the number of visas. Every additional visa requires a larger office package, and the office is the most expensive running item in both structures. If you start with one visa and need three in the second year, you do not pay three times as much; you jump to a different price tier.

That is why we advise estimating your visa needs for three years and choosing accordingly, even if that costs a little more in the first year.

Why mainland becomes cheaper from the second year

The entry-level comparison is deceptive. A mainland company costs considerably more to set up, because the commercial register, attestations and often a real tenancy contract are added. From the second year the picture reverses: licence renewal there is regularly cheaper than in a free zone.

So if you plan for the long term and need an office anyway, you should not look at formation costs alone. Calculated over five years, the two structures are closer together than a first glance suggests.

Offshore is the cheapest option, but it provides no visa and no permanent establishment. It makes sense as a holding for shareholdings, but it is unsuitable as an operating company.

What is included in our packages

So that the comparison has a basis: our complete package for a free zone company formation costs EUR 9,999 without a visa and EUR 12,500 with one to two visas. It includes the licence, corporate tax registration, establishment card, support with opening the bank account and one year of accounting.

We deliberately state the full price instead of advertising a low entry price and adding items later. What is not included is also set out in the offer: medical and Emirates ID per person, attestations where a company is a shareholder, and additional approvals for regulated activities.

The costs that are not paid in dirhams

Besides the fees, there is one item that appears in no table: your time.

• At least one trip for the medical, Emirates ID and bank meeting, realistically one week
• Often a second trip, because the card is only available after seven to ten working days
• Waiting times during the bank's compliance review, two to four weeks with nothing you can do
• Ongoing effort for receipts, deadlines and renewals

If you do not plan for this time, you underestimate the formation, not financially but organisationally.

The tax side belongs in the budget

Corporate tax has applied since June 2023: zero percent on profits up to AED 375,000 and nine percent on the portion above that. In a free zone, the 0% rate is only retained with the status of a Qualifying Free Zone Person.

For the budget, however, another point matters: registration must be completed within three months of incorporation, otherwise a penalty of AED 10,000 applies, regardless of whether any profit has been made at all.

Where saving pays off and where it does not

Saving pays off on the office package, as long as the visa quota allows it, and on the number of activities on the licence. Both can be adjusted later.

You should not save on two things: accounting and the choice of activity. An unsuitable licence activity costs fees and weeks later on, and carelessly kept books become a problem at the latest with the first tax return. Cleaning them up afterwards is regularly more expensive than ongoing support would have been.

How we assess this

The formation is the smaller part of the bill. What counts in the long term is operation: renewals, visas, accounting, tax returns.

From our client work: the most common planning mistake is a budget that covers exactly the formation costs and nothing beyond that. When licence renewal, visa renewal and annual financial statements then all fall due at the same time in the second year, a liquidity gap opens up, in a company that has long been operating.

Our advice: calculate the third year, not the first. And set aside the running costs as a monthly reserve instead of experiencing them as an annual surprise.

Before you budget

• How many people need a visa, in year 1 and in year 3?
• Do you sell to customers in the UAE, now or later?
• What is your expected profit: above or below AED 375,000?
• Is accounting included, or does it come on top?
• Is there budget available for the second and third year?

You can find the complete breakdown with our package prices on the page on company formation in the UAE.